Tag: Finance Function

Accounting Multiple Choice Question – 19 February 2025

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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‘A document issued by a bank on behalf of a customer, authorising a person to draw money to a specified amount from its branches or correspondents, usually in another country, when the conditions set out in the document have been met.’

The statement above is the definition of which ONE of the options below?

Select ONE answer:

  1. Bill of exchange
  2. Export guarantee
  3. Banker’s draft
  4. Letter of credit

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

  1. Not correct
  2. Not correct
  3. Not correct
  4. Correct == > This is a letter of credit. A bill of exchange is drawn by one party on another (not necessarily by a bank). An export guarantee is insurance against defaults on exports. A banker’s draft is a cheque drawn by a bank on one of its own bank accounts.

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Accounting Multiple Choice Question – 18 February 2025

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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Keith is a financial consultant and has made the following statements about overdrafts to his clients in a newsletter:

Statement 1 Interest is paid on the full facility
Statement 2 Legal documentation is minimal in comparison with other types of loan
Statement 3 The facility is repayable on demand
Statement 4 Assets are not normally required as security

Which of these statements are true?

Select ONE answer:

  1. Statements 1, 2 and 3 only
  2. Statements 2, 3 and 4 only
  3. Statements 1, 2 and 4 only
  4. Statements 1, 3 and 4 only

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

  1. Not correct
  2. Correct == > Interest is only paid on the amount borrowed, not on the full facility.
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 17 February 2025

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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Which of the following is a source of long-term finance?

Select ONE answer:

  1. Trade credit from suppliers
  2. Bank overdraft
  3. Factoring of trade debts
  4. Mortgage on property

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

  1. Not correct
  2. Not correct
  3. Not correct
  4. Correct == > A mortgage on property is generally for a term longer than five years, and this is therefore a long-term source of finance.

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Accounting Multiple Choice Question – 16 February 2025

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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Which of the following statements about venture capital is most valid?

Select ONE answer:

  1. Venture capital is a low risk and low return form of finance
  2. Companies listed on major stock exchanges normally use venture capital to raise new finance
  3. Venture capital can be appropriate for a management buyout
  4. Venture capital normally takes the form of debt finance

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

  1. Not correct
  2. Not correct
  3. Correct == > Venture capital can be appropriate for a management buyout. Venture capital is high risk and is not normally available to listed companies. It normally takes the form of equity finance, although it MAY take the form of debt finance.
  4. Not correct

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Accounting Multiple Choice Question – 15 February 2025

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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With respect to an operating lease, which of the following statements is true?

Select ONE answer:

  1. It is only possible to cancel the agreement during the term at significant cost
  2. With this type of agreement, a company sells assets to a finance house and the finance house receives regular payments while the company uses the asset
  3. It is a short-term lease that can easily be cancelled
  4. It is a contract for a specified term, normally equal to the expected asset life

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

  1. Not correct
  2. Not correct
  3. Correct == > An operating lease is a short-term contract which may not last for the full life of the asset. The lessor owns the asset. The other options are all common features of finance leases.
  4. Not correct

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